RBS going back to ‘basics’ after CIMB deal
KUALA LUMPUR, May 14 – The Royal Bank of Scotland (RBS) is looking at consolidating its corporate banking business in Malaysia following the sale of its regional investment banking unit to CIMB and said it has a strong pipeline of European companies looking to tap the large pool of liquidity in the country’s bond market.
RBS Malaysia country executive Andrew Sill said that the UK based bank is still committed to Malaysia and the region and would be focusing on its core business of lending, arranging bonds, both conventional and Islamic and currency hedging.
RBS is 83 per cent owned by the British government as a result of a state funded bail-out following the 2008 financial crisis and the sale of assets to Malaysia’s No.2 bank was seen as a move to help it strengthen its fiscal position.
Sill said that the Asia Pacific investment banking operations were a good business but would require additional investment to take to the next level and the decision to let it go was part of a 5-year strategy to help the UK bank regain its financial independence.
He said that the bank was not looking to sell anymore non-core businesses and was committed to its 11 offices in the Asia-Pacific, the world’s fastest growing region.
“We’re 100 per cent committed to Malaysia,” said Sill at a media briefing today.
He said that MNCs were central to the bank’s business plans and that the visit of British Prime Minister David Cameron last month indicated the UK’s “strong interest” in strengthening its business ties with Malaysia and RBS was well placed to work with UK companies that preferred a British bank.
“A lot of MNCs are looking to Malaysia to raise funds,” he noted.
Ho Weng Yew, RBS head of corporate coverage Malaysia said that the bank was looking at bringing in 4-6 potential sukuk issuers from Europe over the next 12 months.
Malaysia is the world’s leading sukuk market, accounting for US$30 billion of the US$43 billion worth of sukuk issued in the first quarter of this year.
Sill said that the country’s liberalisation of the financial sector had meant more competition for RBS as more banking licenses have been issued to foreign banks.
He added that retention of banking talent was a challenge but the bank was working with Bank Negara to attract more overseas talent to the country, including bringing back its currency CFO from Singapore.
“There’s definitely a brain drain from Malaysia,” he said. “When I was working in Singapore, I was surrounded by more Malaysians than Singaporeans.”
On the economic outlook for Europe the RBS chief said that there was a lot of uncertainty in the Eurozone at the moment and while there could be pockets of growth, the overall picture was “not rosy.”
He said that the Asia Pacific region however had managed to become less dependent on advanced western economies and is now benefitting from sizeable intra-regional trade.
“Malaysia is reasonably well placed and has a lot of surplus liquidity,” he said.
CIMB, Malaysia’s second largest lender acquired most of the Asia Pacific cash equities and associated investment banking businesses of the RBS for RM849 million last month, becoming the largest investment banking franchise in Asia outside Japan.
The deal saw CIMB paying RBS a gross amount of approximately RM431.8 million and injecting a further RM417.6 million of new capital into various operating entities.
The addition of the RBS units will mean that, upon regulatory approvals, CIMB will gain new on-shore presence in Taiwan and Australia, as well substantially enlarged operations in Hong Kong, India and China.
RBS has two branches in Malaysia and employs about 100 staff.